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Once the bids get a green signal from the firms, they will be opened by the committee of creditors (CoC), who will take a call to accept or reject the offers by next week. The winning offer will then be sent to the National Company Law Tribunal (NCLT) for a final resolution. Bankers say the resolution professional and the NCLT will have to take a call on the eligibility of ArcelorMittal and Numetal, as it involves interpretation of the Insolvency and Bankruptcy Code and relevant rules. Lenders also expect a lengthy court battle in Essar Steel’s case, as both bidders have high profiles and are cash rich.

In the case of Ruias, Essar Steel has defaulted to bank loans worth ~44 billion. Ruias own 25 per cent stake in Numetal through a Singapore-based trust, while VTB Bank of Russia owns a majority stake in Numetal with two other partners. An Essar official, however, said that none of the Essar Steel promoters bid for the company and the entire bid was led by VTB Bank, so they expected to pass the test.

On the other hand, according to a filing with BSE, ArcelorMittal held 29.05 per cent stake in Uttam Galva Steels as a foreign promoter at end of December 2017. Miglani family and their companies held 31.82 per cent stake in Uttam Galva, which has defaulted on repayments due to lenders. It is now a non-performing asset (NPA).

In a February 7 filing with stock exchanges, however, Uttam Galva said that the entire shareholding held by ArcelorMittal Netherlands BV had been transferred to Sainath Trading Company, a Miglani family company, for ~1 a share. Consequently, the co-promotion agreement dated September 4, 2009, amongst certain shareholders was terminated.

Lenders said they would look at the promoter status at the time of company turning into a NPA and not when the bid was made.

Earlier, domestic lenders, led by the State Bank of India, had also asked L N Mittal, billionaire-promoter of ArcelorMittal, to repay debt of ~13.40 billion taken by KSS Petron Private Limited after the latter defaulted on its loans in India. Mittal owns 33 per cent stake in KazStroyServices (KSS) of Kazakhstan, an oil infrastructure provider company, in his personal capacity. KSS, in turn, holds 100 per cent stake in KSS Petron, which turned into a NPA in 2015. Mittal undertook a second transaction and sold his stake in KSS last week overseas so that it can bid for Essar Steel.